Slush funds, oil sheiks, prostitutes, Swiss banks,
kickbacks, blackmail, bagmen, arms deals, war plans, climbdowns, big lies
and Dick Cheney - it's a scandal that has it all, corruption and cowardice
at the highest levels, a festering canker at the very heart of world politics,
where the War on Terror meets the slaughter in Iraq. Yet chances are you've
never heard about it - even though it happened just a few days ago. The
fog of war profiteering, it seems, is just as thick as the fog of war.

But here's how the deal went down. On December 14,
the UK attorney general, Lord Goldsmith (Pete Goldsmith as was, before
his longtime crony Tony Blair raised him to the peerage), peremptorily
shut down a two-year investigation by the Serious Fraud Office (SFO) into
a massive corruption case involving Britain's biggest military contractor
and members of the Saudi royal family. SFO bulldogs had just forced their
way into the holy of holies of the great global back room - Swiss bank
accounts - when Pete pulled the plug. Continuing with the investigation,
said His Lordship, "would not be in the national interest."

It certainly wasn't in the interest of BAE Systems,
the British arms merchant that has become one of the top 10 US military
firms as well, through its voracious acquisitions during the profitable
War on Terror - including some juicy hook-ups with the Carlyle Group, the
former corporate crib of George H.W. Bush and George W. Bush and still
current home of the family fixer, James Baker. BAE director Phillip Carroll
is also quite at home in the White House inner circle: a former chairman
of Shell Oil, he was tapped by George II to be the first "Senior Adviser
to the Iraqi Ministry of Oil" in those heady "Mission Accomplished"
days of 2003. BAE has allegedly managed to "disappear" approximately
$2 billion in shavings from one of the largest and longest-running arms
deals in history - the UK-Saudi warplane program known as "al-Yamanah"
(Arabic for "The Dove"). Al-Yamanah has been flying for 18 years
now, with periodic augmentations, pumping almost $80 billion into BAE's
coffers, with negotiations for $12 billion in additional planes now nearing
completion. SFO investigators had followed the missing money from the deal
into a network of Swiss bank accounts and the usual Enronian web of offshore
front companies.

Nor was continuing the investigation in the interest
of the Saudi royals, whose princely principals in the arms deal were embarrassed
by allegations that a BAE-administered slush fund had supplied the fiercely
ascetic fundamentalists with wine, women and song - not to mention lush
apartments, ritzy holidays, cold hard cash, Jags, Ferraris and at least
one gold-plated Rolls-Royce, as The Times reported. One scam - uncovered
by the Guardian in a batch of accidentally released government documents
- involved inflating the price of the warplanes by 32 percent. The rakeoff
was then presumably siphoned into BAE's secret accounts, with some of it
kicking back to the Saudi royals and their retainers.

The Saudis were said to be incensed by the continuing
revelations spinning out of the investigation, which had begun in 2004
after the Guardian first got wind of the alleged slush fund. Last month,
with talks on the new $12 billion extension in the final stages, the Saudis
lowered the boom, threatening to ashcan al-Yamanah and buy their warplanes
from - gasp! - the French instead. For a week or two, the Blair government
played chicken with the Saudis, hoping the threat was just a hardball bluff
for better terms (or maybe bigger slush).

Then came a curious intervention. Last month, Dick
Cheney traveled to Riyadh for talks with Saudi King Abdullah. There he
beseeched the king to step in and help pull America's fat out of the wildfire
of Iraq by using Saudi influence on Iraq's volatile Sunni minority, the
Scotland Sunday Herald reported. It's also thought that Cheney asked the
Saudis to stump up more cash to replace some of the billions of dollars
in missing "reconstruction money" that White House cronies and
local operators have somehow "misplaced" into their own pockets
during the war.

It is widely believed in top UK political circles
that among the many considerations the Saudis asked for in return for the
possibility of helping out in Iraq was the application of White House pressure
on Tony Blair to quash the BAE investigation. The king apparently put this
more in the form of a demand than a request: senior sources in the Blair
government told the Observer that the Saudis threatened to stop sharing
its extensive intelligence on terrorism and kick all British intelligence
and military personnel out of the kingdom if Blair didn't kill the probe.

But if Cheney and Abdullah did do a strongarm number
on Blair, they probably didn't have to break a sweat to convince him. In
this case, Blair no doubt could echo the words of Macbeth when he saw the
ghostly dagger drawing him on to dirty deeds: "Thou marshall'st me
the way that I was going." For certainly, Blair had no desire to see
the fraud probe of BAE progress any further. He has been one of the arms
peddler's biggest cheerleaders - and most assiduous shills - throughout
his long term in office. For example, in January 2002, as India and Pakistan
teetered on the edge of a nuclear exchange over Kashmir, Blair made a lightning
trip to both countries to preach peace - and to hawk a $1.4 billion deal
for BAE jet fighters with India. This move, of course, only made the already
outgunned Pakistanis even more likely to use their nukes to stave off any
attack. It seems not even the greatest threat of nuclear war that the world
had ever seen was enough to stop Blair from throwing gasoline on the fire
in the service of BAE's bottom line.

Yet although the Saudis certainly weren't pleased
with the investigation and wanted it to go away, as the SFO moved forward
it became increasingly clear that BAE itself had more to fear from the
probe than did the gilded guardians of Mecca. In 2002, the UK adopted a
set of stringent anti-bribery laws that criminalized the use of old-fashioned
baksheesh to grease a deal with foreign powers. As the Guardian reported,
the SFO were pursuing three key questions: Were members of the Saudi royal
family getting secret UK payoffs? Were the financial transactions crimes
under UK law? And had BAE lied to government agencies in its claims to
have reformed its past practices and dispensed with the "confidential
Saudi agents" who served as bagmen for the bribes?

They believed the answers were waiting in Berne,
Switzerland, in a box of files being kept for them by the Swiss federal
prosecutor's office, the Guardian reported. This box "was the hottest
potato of all. The Swiss dossier contained print-outs of BAE's recent offshore
banking transactions with key Saudi middlemen. The normally highly-secret
bank records had recently been secured by the authorities at the British
investigators' request."

But just before they were to fly down to claim the
Swiss bank trove, Goldsmith ordered the SFO to stop the probe and turn
over all their existing files for his examination. After two days of poring
through the material (or perhaps not poring through it), Goldsmith suddenly
announced that, upon consultation with the cabinet and the prime minister,
he was quashing the entire investigation in the name of "the UK's
security and foreign policy interests."

Legal experts told UK papers they could find no precedent
for such a move. Oddly enough, Her Majesty's Attorney General - a certain
Lord Goldsmith - had been of a similar mind just 10 days before, when,
in response to a ferocious PR campaign against the SFO probe launched by
BAE's friends among the great and good, he declared that he had "no
intention of interfering with the investigation," as the Guardian
reports. What a difference 10 days, Dick Cheney and Saudi blackmail makes!

Not to mention Blair's desire to peddle even more
BAE weaponry on yet another "peace mission" - this time to the
Middle East, where he conducted a frantic and utterly fruitless "whirlwind
tour" in mid-month. But before jetting off to seek ever-elusive "breakthroughs"
on Iraq and Israel-Palestine, Blair wanted the SFO imbroglio wrapped up,
so he could proffer BAE planes to the United Arab Emirates without all
that folderol about bribes hanging over the company, the Times reported.

In delivering his ruling on BAE, Goldsmith acted
with the same bold flip-floppery he had displayed in the run-up to the
invasion of Iraq. Then too, there was a small gap of time in which a momentous
reversal was made, between his first, detailed private advice to Blair
that there were at least six different ways in which the invasion could
be considered a war crime and his last-minute, hastily-sketched public
declaration that, by gum, he thought the war just might be legal after
all. Despite a few minor quibbles on various tactics in the never-ending
Terror War - Goldsmith has on occasion voiced a few mild objections to
the American concentration camp on Guantanamo Bay - the good Lord has proven
himself a worthy counterpart to his comrade across the sea, US Attorney
General Alberto Gonzales, in exalting the principles of political expediency
and war profiteering above the rule of law.

II. Tony in Wonderland

There is yet another parallel between the fraud probe
kibosh and the Iraq warmongering: the official reasons given for the action
have been constantly changing. Indeed, in the days following Goldsmith's
hugger-mugger announcement - carefully timed to coincide with the release
of the final report on Princess Diana's death, which the government knew
would consume every ounce of media oxygen that day - Blair and his high
ministers of state peddled a dizzying and often contradictory array of
justifications for stifling the investigation.

There was the initial "security and foreign
policy interests" offered by Goldsmith to Parliament and initially
echoed by Blair. The UK-Saudi relationship "is vitally important for
our country, in terms of counterterrorism, in terms of the broader Middle
East, in terms of helping in respect of Israel-Palestine, and that strategic
interest comes first," Blair said after the ruling, as AP reported.

However, that explanation didn't play very well,
for it seemed to confirm the reports that Britain had indeed been blackmailed
and bullied by Saudi Arabia into dropping the probe. The underlying implications
of Blair's stance were riddled with glaring contradictions: Saudi Arabia
is our strong, trusted friend and ally who, er, uh, has threatened to fan
the flames of regional conflict and expose us to a much greater risk of
terrorist attack if we don't disregard our own laws.

Somehow, the sight of a British Prime Minister declaring
"if we don't do what they say, they'll hurt us" did not convey
the degree of wisdom and reassurance the government sought to project about
the decision. As AP noted, some of those most upset by the ruling came
from Blair's own increasingly-fractious Labour Party - which hit another
new low in the polls this week, dropping further behind the resurgent Tories.
"We appear to be giving businessmen carte blanche to do business with
Saudi Arabia, which may involve illegal payments or illegal inducements,"
said Eric Illsley, a Labour member of Parliament's Foreign Affairs Select
Committee. "We have been leaned on very heavily by the Saudis."

And so this argument was largely supplanted by the
economic considerations that BAE's supporters had been trumpeting in the
press in the weeks before Goldsmith's ruling. If the Saudis had slaughtered
"The Dove" deal because of the SFO probe, Britons were told,
it would have cost the nation 100,000 jobs. This figure, first floated
by BAE's media and parliamentary front men last month, soon became the
standard number touted by government backers after the Goldsmith ruling.
The fact that it was flatly contradicted by a University of York study
which showed that a cancellation of the impending al-Yamanah extension
would have eliminated just 5,000 jobs cut no ice with the panicky spin
doctors. (To be sure, even the lesser job loss would have been a heavy
blow to the workers involved; but at that smaller level, it was a blow
that could have easily been cushioned by government compensation and genuine
efforts at retraining or re-employment elsewhere: the kind of action that
Blair's government has often promised yet seldom delivered to the many
industries that have gone belly-up - and overseas - during his tenure.)

The new line also flatly contradicted Goldsmith's
original declaration to Parliament, in which he insisted that economic
considerations had "played no part" in his decision. When the
rank hypocrisy of this was pointed out, Blair and Goldsmith both came up
with a new reason: the case wasn't strong enough to go forward, there was
not enough evidence of wrongdoing. Aside from the fact that Goldsmith himself
had prevented the SFO from examining the most relevant evidence in the
entire case - BAE's own secret bank records - this stance was, again, at
odds with his position just days earlier, when he'd declared he would not
intervene in the investigation. That declaration had come after he had
gone over the case and the evidence for it in a meeting with SFO director
Robert Wardle.

SFO officials strongly disputed Blair and Goldsmith's
claim that the case was weak. And in any case, the whole point of the probe
was not to guarantee a prosecution but to establish the truth. While the
Blair government's disinterest in establishing the truth as opposed to
pushing a political line is well-established (see the Downing Street Memos),
they are vitally interested in information. So much so that they apparently
bugged the SFO offices during the probe, the Independent reported. "I
was told by detectives that the probe was being bugged. They had reached
this conclusion because highly confidential information on the inquiry
had been reaching outside parties," a senior figure involved in the
investigation told the paper. SFO investigators believe the probe was actually
quashed because the Blair spies had learned how very substantial it was,
not because the evidence was lacking.

In the end, after the "weak-case" justification
turned out to be a weak case itself, Blair and the gang reverted back to
a variation of the "security" line: the noble struggle to free
the peoples of the Middle East from the clutches of armed Islamic extremism
superseded all other considerations. Despite the ever-soaring rhetoric,
however, Blair failed to make clear exactly how providing $80 billion worth
of advanced arms to perhaps the most repressive Islamic extremist state
on earth can be said to advance the cause of freedom and tolerance in the
Middle East.

Lord knows - and lords know - that unseemly accommodations
sometimes have to be made in this world, especially in geopolitics. A wink
here, a little baksheesh there between unsavoury characters are often better
than, say, launching a war of aggression and murdering more than half a
million innocent people to achieve your political and commercial ends.
But in the BAE case, as in so much else in politics, it is the hypocrisy
that rankles most. Western governments obviously believe they must give
guns and bribes to extremist tyrants in order to obtain the oil that keeps
their own nations in such disproportionate clover - but they lack the guts
to say so in plain language, dressing up this ugly business with meaningless
trumpery about freedom, peace and security.

Are they trying to mask their own cynicism - or protect
the tender sensibilities of their electorates, who might prefer sugared
lies to acknowledgements of the dirty deals that undergird their way of
life?

Chris Floyd is an American journalist. His weekly
political column, "Global Eye," ran in the Moscow Times from
1996 to 2006. His work has appeared in print and online in venues all over
the world, including The Nation, Counterpunch, Columbia Journalism Review,
the Christian Science Monitor, Il Manifesto, the Bergen Record and many
others. His story on Pentagon plans to foment terrorism won a Project Censored
award in 2003. He is the author of Empire Burlesque: High Crimes and Low
Comedy in the Bush Imperium, and is co-founder and editor of the "Empire
Burlesque" political blog.